5.

An insurance company must make payments to a customer of $1 million in one year and $400,000 in four years. The yield curve is flat at 10%. Use annual compounding. If the company wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase?

a.

1.69

b.

1.96

c.

2.37

d.

2.86

6.

The weak form of the efficient market hypothesis contradicts

a.

both fundamental analysis and technical analysis.

b.

fundamental analysis, but supports technical analysis as valid.

c.

technical analysis, but supports fundamental analysis as valid.

d.

technical analysis, but is silent on the possibility of successful fundamental analysis.

7.

The main difference between the three forms of market efficiency is that

a.

the definition of information differs.

b.

the definition of excess return differs.

c.

the definition of efficiency differs.

d.

the definition of prices differs.

8.

Proponents of the EMH think technical analysts

a.

should focus on financial statements.

b.

should focus on relative strength.

c.

are wasting their time.

d.

should focus on resistance levels.